[Federal Register: August 24, 1998 (Volume 63, Number 163)]
[Notices]
[Page 45076-45087]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24au98-81]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of Inspector General
Publication of OIG Compliance Program Guidance for Clinical
Laboratories
AGENCY: Office of Inspector General (OIG), HHS.
ACTION: Notice.
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SUMMARY: This Federal Register notice sets forth the OIG's recently-
issued Compliance Program Guidance for Clinical Laboratories. The OIG
had previously developed and published a model compliance plan for the
clinical laboratory industry on March 3, 1997. This Compliance Program
Guidance for Clinical Laboratories is intended to be more consistent
with compliance program guidances issued by the OIG with respect to the
hospital industry and to home health agencies, and serves to clarify
various aspects of the original model plan. As with previously-issued
compliance program guidances, we believe that the development of this
guidance for clinical laboratories will continue as a positive step
towards promoting a higher level of ethical and lawful conduct
throughout the entire health care community.
FOR FURTHER INFORMATION CONTACT: Christine Saxonis, Office of Counsel
to the Inspector General, (202) 619-2078.
SUPPLEMENTARY INFORMATION: As part of a major initiative to engage the
private health care community in combating fraud and abuse, the OIG
developed and published in the Federal Register a model compliance plan
for the clinical laboratories (62 FR 9435; March 3, 1997). The
compliance plan was intended to provide clear guidance to that aspect
of the clinical laboratory industry that was interested in reducing
fraud and abuse within their organizations. Since that issuance, the
OIG has developed and issued specific compliance program guidance for
the hospital industry and for home health agencies.
This compliance program guidance is intended to refine and build on
the original model guidance plan for clinical laboratories. In
developing an effective compliance program, the OIG has identified 7
fundamental elements. They are:
<bullet> Implementing written policies, procedures and standards of
conduct;
<bullet> Designing a compliance officer and compliance committee;
<bullet> Conducting effective training and education;
<bullet> Developing effective lines of communication;
<bullet> Enforcing standards through well-publicized disciplinary
guidelines;
<bullet> Conducting internal monitoring and auditing; and
<bullet> Responding promptly to detected offenses and developing
corrective action.
The development of this new Compliance Program Guidance for
Clinical Laboratories has been enhanced
[[Page 45077]]
based upon changes in Health Care Financing Administration (HCFA)
policy, private industry's comments on the original model plan and
additional comments submitted by HCFA and the Department of Justice.
While the key components of the original plan are still included,
this Compliance Program Guidance sets forth a number of clarifying
elements. Specifically, the compliance guidance:
<bullet> Focuses on the fact that while physicians can order any
tests they believe are appropriate, Medicare will only pay for those
tests which are covered, reasonable and necessary;
<bullet> Recognizes that individuals other than physicians may be
authorized to order tests in some States;
<bullet> Recognizes additional claim information, such as
requesting the diagnosis information contained in the medical record,
can be obtained from an authorized person rather than directly from the
physician;
<bullet> Notes that physicians are required to submit diagnostic
information to the laboratory when ordering many--although not all--
laboratory tests;
<bullet> Emphasizes the need for the tests performed in accordance
with standing orders to be reasonable and necessary; and
<bullet> Clarifies laboratories should not charge physicians a
price below fair market value for non-federal health program tests in
order to include their Federal health care business.
In addition, while the original model laboratory compliance plan
focused on the billing of automated multichannel chemistry tests, the
American Medical Association has since deleted these codes from the
1998 CPT coding handbook, and HCFA no longer recognizes these as
billable or reimbursable codes. As a result, physicians now must
individually order tests that once compromised a chemistry profile.
This guidance specifically reflects this policy change.
A reprint of the OIG's Compliance Program Guidance for Clinical
Laboratories follows.
OIG Compliance Program Guidance for Clinical Laboratories
Introduction
The Office of Inspector General (OIG) of the Department of Health
and Human Services (HHS) continues in its efforts to promote
voluntarily developed and implemented compliance programs for the
health care industry. The following compliance program guidance is
intended to assist clinical laboratories in developing effective
internal controls that promote adherence to applicable Federal and
State law, and the program requirements of Federal, State, and private
health plans.<SUP>1</SUP> The adoption and implementation of voluntary
compliance programs significantly advance the prevention of fraud,
abuse, and waste in the clinical laboratory industry while at the same
time further the fundamental mission of all health care providers,
which is to provide quality services and care to patients.
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\1\ This guidance is a republication of the model clinical
laboratory compliance plan issued by the OIG on February 27, 1997.
This guidance has been amended to reflect HCFA policy changes and to
be consistent with the OIG's Compliance Program Guidance for
Hospitals. See 63 FR 8987 (February 23, 1998) and the OIG's web site
at http://www.dhhs.gov/progorg/oig.
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Within this document, the OIG intends to provide first, its general
views on the value and fundamental principles of clinical laboratory
compliance programs, and second, specific elements that each clinical
laboratory should consider when developing and implementing an
effective compliance program. While this document presents basic
procedural and structural guidance for designing a compliance program,
it is not in itself a compliance program. Rather, it is a set of
guidelines for consideration by a clinical laboratory interested in
implementing a compliance program. The recommendations and guidelines
provided in this document must be considered depending upon their
applicability to each particular clinical laboratory.
Fundamentally, compliance efforts are designed to establish a
culture within a clinical laboratory that promotes prevention,
detection and resolution of instances of conduct that do not conform to
Federal and State law, and Federal, State and private payor health care
program requirements, as well as the clinical laboratory's ethical and
business policies. In practice, the compliance program should
effectively articulate and demonstrate the organization's commitment to
the compliance process. The existence of benchmarks that demonstrate
implementation and achievements are essential to any effective
compliance program.
Eventually, a compliance program should become part of the fabric
of routine clinical laboratory operations.
Specifically, compliance programs guide a clinical laboratory's
governing body (e.g., Board of Directors), Chief Executive Officer
(CEO), managers, technicians, billing personnel, and other employees in
the efficient management and operation of a clinical laboratory. These
employees are especially critical as an internal control in the
reimbursement and payment areas, where claims and billing operations
are often the source of fraud and abuse and, therefore, historically
have been the focus of Government regulation, scrutiny and sanctions.
It is incumbent upon a clinical laboratory's corporate officers and
managers to provide ethical leadership to the organization and to
assure that adequate systems are in place to facilitate ethical and
legal conduct. Indeed, many clinical laboratories and clinical
laboratory organizations have adopted mission statements articulating
their commitment to high ethical standards. A formal compliance
program, as an additional element in this process, offers a clinical
laboratory a further concrete method that may improve quality of
services and reduce waste. Compliance programs also provide a central
coordinating mechanism for furnishing and disseminating information and
guidance on applicable statutes, regulations and other requirements of
Federal, State and private health plans.
Adopting and implementing an effective compliance program requires
a substantial commitment of time, energy and resources by senior
management and the clinical laboratory's governing body.<SUP>2</SUP>
Programs hastily constructed and implemented without appropriate
ongoing monitoring will likely be ineffective. While it may require
significant additional resources or reallocation of existing resources
to implement an effective compliance program, the OIG believes that the
long term benefits of implementing the program outweigh the costs.
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\2\ Indeed, recent case law suggests that the failure of a
corporate Director to attempt in good faith to institute a
compliance program in certain situations may be a breach of a
Director's fiduciary obligation. See, e.g., In re Caremark
International Inc. Derivative Litigation, 698 A.2d 959 (Ct. Chanc.
Del. 1996).
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A. Benefits of a Compliance Program
In addition to fulfilling its legal duty to ensure that it is not
submitting false or incorrect claims to Government and private payors,
a clinical laboratory may gain numerous additional benefits by
implementing an effective compliance program. Such programs make good
business sense in that they help a clinical laboratory fulfill its
fundamental mission of providing quality services as well as assisting
clinical laboratories in identifying weaknesses in internal systems and
management. Other important potential benefits include the ability to:
[[Page 45078]]
<bullet> Concretely demonstrate to employees and the community at
large the clinical laboratory's strong commitment to honest and
responsible corporate conduct;
<bullet> Provide a more accurate view of employee behavior relating
to fraud and abuse;
<bullet> Identify and prevent criminal and unethical conduct;
<bullet> Improve the quality, efficiency and consistency of
services;
<bullet> Create a centralized source for distributing information
on health care statutes, regulations and other program directives
related to fraud and abuse and related issues;
<bullet> Develop a methodology that encourages employees to report
potential problems;
<bullet> Develop procedures that allow the prompt, thorough
investigation of alleged misconduct by corporate officers, managers and
other employees;
<bullet> Initiate immediate, appropriate, and decisive corrective
action; and
<bullet> Through early detection and reporting, minimize the loss
to the Government from false claims, and thereby reduce the clinical
laboratory's exposure to civil damages and penalties, criminal
sanctions, and administrative remedies, such as program exclusion.
<SUP>3</SUP>
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\3\ The OIG, for example, will consider the existence of an
effective compliance program that pre-dated any governmental
investigation when addressing the appropriateness of administrative
penalties. Further, the False Claims Act, 31 U.S.C. 3729-3733,
provides that a person who has violated the Act, but who voluntarily
discloses the violation to the Government, in certain circumstances
will be subject to not less than double, as opposed to treble,
damages. See 31 U.S.C. 3729(a).
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Overall, the OIG believes that an effective compliance program is a
sound investment on the part of a clinical laboratory.
The OIG recognizes that the implementation of a compliance program
may not entirely eliminate fraud, abuse and waste from the clinical
laboratory system. However, a sincere effort by clinical laboratories
to comply with applicable Federal and State standards, as well as the
requirements of private health care programs, through the establishment
of an effective compliance program, significantly reduces the risk of
unlawful or improper conduct.
B. Application of Compliance Program Guidance
There is no single ``best'' clinical laboratory compliance program,
given the diversity of laboratories within the industry. The OIG
understands the variances and complexities within the clinical
laboratory industry and is sensitive to the differences among large and
small clinical laboratories. However, elements of this guidance can be
used by all clinical laboratories, regardless of size, location or
corporate structure, to establish an effective compliance program. We
recognize that some clinical laboratories may not be able to adopt
certain elements to the same comprehensive degree that others with more
extensive resources may achieve. This guidance represents the OIG's
suggestions on how a clinical laboratory can best establish internal
controls and monitoring to correct and prevent fraudulent activities.
By no means should the contents of this guidance be viewed as an
exclusive discussion of the advisable elements of a compliance program.
In drafting this guidance, we took into consideration the Model
Compliance Plan for Clinical Laboratories issued by the OIG in February
1997, the clinical laboratory industry's comments on that plan, changes
in HCFA policy and the OIG's Compliance Program Guidance for Hospitals.
As appropriate, this guidance may be further modified and expanded
as more information and knowledge is obtained by the OIG, and as
changes in the rules, policies and procedures of the Federal, State and
private health plans occur. We recognize that clinical laboratories are
already accountable for complying with an extensive set of statutory
and other legal requirements, far more specific and complex than what
we have referenced in this document. We also recognize that the
development and implementation of compliance programs in clinical
laboratories often raise sensitive and complex legal and managerial
issues.<SUP>4</SUP> However, the OIG wishes to offer what it believes
is critical guidance for providers who are sincerely attempting to
comply with the relevant health care statutes, regulations and other
requirements of Federal, State and private health plans.
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\4\ Nothing stated herein should be substituted for, or used in
lieu of, competent legal advice from counsel.
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Compliance Program Elements
The elements proposed by these guidelines are similar to those of
the compliance program guidance for hospitals that was published by the
OIG in February 1998 and of our corporate integrity
agreements.<SUP>5</SUP> The elements represent a guide--a process that
can be used by clinical laboratories, whether an independent national
laboratory, a hospital laboratory, or a small, regional laboratory.
Moreover, the elements can be incorporated into the managerial
structure of the clinical laboratory. As we stated in our compliance
program guidance for hospitals, these suggested guidelines can be
tailored to fit the needs and financial realities of a particular
laboratory. The OIG is cognizant that with regard to compliance
programs, one model is not suitable to every clinical laboratory.
Nonetheless, the OIG believes that every clinical laboratory,
regardless of size or structure, can benefit from the principles
espoused in this guidance.
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\5\ Corporate integrity agreements are executed as part of a
civil settlement agreement between the health care provider and the
Government to resolve a case based on allegations of health care
fraud or abuse. These OIG-imposed programs are in effect for a
period of 3 to 5 years and require many of the elements included in
this compliance program guidance.
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The OIG believes that every effective compliance program must begin
with a formal commitment by the clinical laboratory's governing body to
include all of the applicable elements listed below. These elements are
based on the seven steps of the Federal Sentencing
Guidelines.<SUP>6</SUP> We recognize that full implementation of all
elements may not be immediately feasible for all clinical laboratories.
However, as a first step, a good faith and meaningful commitment on the
part of the clinical laboratory will substantially contribute to a
program's successful implementation.
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\6\ See United States Sentencing Commission Guidelines,
Guidelines Manual, 8A1.2 comment. (n.3(k)).
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At a minimum, comprehensive compliance programs should include the
following 7 elements:
(1) The development and distribution of written standards of
conduct, as well as written policies and procedures that promote the
clinical laboratory's commitment to compliance (e.g., by including
adherence to compliance as an element in evaluating managers and
employees) and that address specific areas of potential fraud, such as
marketing schemes, CPT/HCPCs coding issues, improper ICD-9 coding, and
improper claims submission;
(2) The designation of a chief compliance officer and other
appropriate bodies (e.g., a corporate compliance committee) charged
with the responsibility of operating and monitoring the compliance
program, and who report directly to the CEO and the governing body;
(3) The development and implementation of regular, effective
education and training programs for all affected employees;
(4) The maintenance of a process, such as a hotline, to receive
complaints, and the adoption of procedures to protect the anonymity of
complainants
[[Page 45079]]
and to protect whistleblowers from retaliation;
(5) The development of a system to respond to allegations of
improper/illegal activities and the enforcement of appropriate
disciplinary action against employees who have violated internal
compliance policies, applicable statutes, regulations or requirements
of Federal, State or private health plans;
(6) The use of audits and/or other evaluation techniques to monitor
compliance and assist in the reduction of identified problem areas; and
(7) The investigation and remediation of identified systemic
problems and the development of policies addressing the non-employment
or retention of sanctioned individuals.
A. Written Procedures and Policies
Laboratory compliance programs should require the development and
distribution of written compliance policies. These policies should be
developed under the supervision and direction of the chief compliance
officer or the equivalent and should, at a minimum, be provided to all
individuals who are affected by the specific policy at issue. One
convenient method of achieving this goal is to create a three-ring
compliance policy notebook. This format permits the filing of new and
amended or revised compliance policies and ensures that affected
individuals have easy access to the laboratory's written policies. A
master index should show when policies are changed.
1. Standards of Conduct
Laboratories should develop standards of conduct for all employees
that clearly delineate the policies of the laboratory with regard to
fraud, waste and abuse and adherence to all statutes, regulations and
other program requirements governing Federal, State and private health
benefit plans. These standards should be made available to all
employees; translated, interpreted (e.g., may be signed for hard of
hearing or deaf employees) or put into Braille as necessary, and
regularly updated as the policies and regulations are modified.
When an employee first begins working for the clinical laboratory,
and each time new standards of conduct are issued, employees should be
asked to sign a statement certifying that they have received, read, and
understood the standards of conduct. All employee certifications should
be retained by the laboratory.
2. Medical Necessity
Laboratory compliance programs, to be effective, should communicate
to physicians that claims submitted for services will only be paid if
the service is covered, reasonable, and necessary for the beneficiary,
given his or her clinical condition. Laboratories should take all
reasonable steps to ensure that it is not submitting claims for
services that are not covered, reasonable and necessary.<SUP>7</SUP>
Upon request, a laboratory should be able to produce or obtain from the
treating physician (test ordering), authorized person on the
physician's staff or other individual authorized by law to order tests
the documentation to support the medical necessity of the service the
laboratory has provided and billed to a Federal or private health care
program. We recognize that laboratories do not and cannot treat
patients or make medical necessity determinations. However, there are
steps that such facilities can take to assure compliance with the
applicable statutes, regulations and the requirements of Federal, State
and private health plans.
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\7\ In limited instances, HCFA does allow laboratories to submit
claims when the lab believes the test may be denied. Such instances
include, but are not limited to: when the beneficiary has signed an
Advance Beneficiary Notice (ABN) (See Medicare Carriers Manual
Sec. 7300.5) (Part D in this section further addresses ABN issues)
and when the beneficiary requests the provider submit the claim (See
Medicare Carriers Manual Sec. 3043). In the first instance the lab
should include modifier GA on the claim which indicates the
beneficiary has signed an ABN and in the latter instance the lab
should note on the claim their belief that the service is noncovered
and that it is being submitted at the beneficiary's insistence.
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As a preliminary matter, the OIG recognizes that physicians or
other authorized individuals must be able to order any tests that they
believe are appropriate for the treatment of their patients. However,
we believe that physicians must be made aware by the billing laboratory
that Medicare will only pay for tests that meet the Medicare coverage
criteria and are reasonable and necessary to treat or diagnose an
individual patient. Section 1862(a)(1)(A) of the Social Security Act
states, ``no payment may be made under Part A or Part B for any
expenses incurred for items or services which * * * are not reasonable
and necessary for the diagnosis or treatment of an illness or injury or
to improve the functioning of a malformed body member.'' Therefore,
Medicare may deny payment for a test that the physician believes is
appropriate, but which does not meet the Medicare coverage criteria
(e.g., done for screening purposes) or where documentation in the
entire patient record, including that maintained in the physician's
records, does not support that the tests were reasonable and necessary
for a given patient. Laboratories can and should advise their clients
that tests submitted for Medicare reimbursement must meet program
requirements <SUP>8</SUP> or the claim may be denied.
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\8\ See fn. 7.
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Laboratories may implement the following steps through their
compliance programs or some other appropriate mechanism to ensure that
the claims they submit to Federal or private health care programs meet
the appropriate program requirements:
a. Requisition design: While HCFA does not design or approve
requisition forms, laboratories should construct the requisition form
to capture the correct program information as required by Federal or
private health care programs and to promote the conscious ordering of
tests by physicians or other authorized individuals. The laboratory
should construct the requisition form to ensure that the physician or
other authorized individual has made an independent medical necessity
decision with regard to each test the laboratory will bill.
Laboratories should encourage physicians or other authorized
individuals to submit diagnosis information for all tests ordered, as
documentation of the medical necessity of the service. The form should
contain a statement indicating that Medicare generally does not cover
routine screening tests.
b. Notices to physicians: While HCFA does not impose educational
requirements upon the laboratories, labs are in a unique position to
educate their physician clients. Therefore, laboratories should provide
all of their physician clients with annual written notices that set
forth: (1) The Medicare national policy and Medicare contractor local
medical review policy for lab tests; (2) that organ or disease related
panels will only be paid and will only be billed when all components
are medically necessary; and (3) the Medicare laboratory fee schedule
and a statement informing the physician that the Medicaid reimbursement
amount will be equal to or less than the amount of Medicare
reimbursement. The notice must also provide the phone number of the
clinical consultant. The clinical consultant is required under the
Clinical Laboratory Improvement Amendment (CLIA) certification (42 CFR
493.1453).
In addition to the general notices above, laboratories that
continue to offer clients the opportunity to request customized
profiles should provide annual written notices that: (1) Explain the
Medicare reimbursement paid for each component of each such profile;
(2) inform physicians that using a
[[Page 45080]]
customized profile may result in the ordering of tests which are not
covered, reasonable or necessary and that tests will not be billed;
<SUP>9</SUP> and (3) inform physicians that the OIG takes the position
that an individual who knowingly causes a false claim to be submitted
may be subject to sanctions or remedies available under civil, criminal
and administrative law.
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\9\ See fn. 7.
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c. Physician acknowledgments: Although HCFA does not require
physicians to sign acknowledgments, laboratories should have the
physician sign an acknowledgment stating he or she understands the
potential implications of ordering customized profiles.
d. Use of Advance Beneficiary Notices: Advance Beneficiary Notices
(ABNs) are used when there is a likelihood that an ordered service will
not be paid. Before the service is furnished, the beneficiary should be
notified, in writing, of the likelihood that the specific service will
be denied. After being so informed the beneficiary has the choice to
either (1) decide to receive the service and sign the agreement to pay
on the ABN or (2) decide not to receive the service and therefore does
not sign the ABN. Beneficiaries should not be asked to sign blank ABNs.
As the entity furnishing and billing for services, it is ultimately
the laboratory's responsibility to produce the ABN, upon request. In
many cases, it is difficult for the laboratories to directly obtain an
ABN from the beneficiary. Therefore, laboratories may wish to educate
physicians on the appropriate use of ABNs.
The notice must be in writing, must clearly identify a particular
service, must state that payment for the particular service likely will
be denied and must give the reason(s) for the belief that payment is
likely to be denied.
Routine notices to beneficiaries which do no more than state that
denial of payment is possible or that they never know whether payment
will be denied are not considered acceptable evidence of advance
notice. Notices should not be given to beneficiaries unless there is
some genuine doubt regarding the likelihood of payment as evidenced by
the reasons stated on the ABN. Giving notice for all claims or services
is not an acceptable practice.
e. Test utilization monitoring: The OIG believes that laboratories
can and should take the steps described in this compliance guidance to
help ensure appropriate billing of lab tests. We also believe that
there are steps laboratories can take to determine whether physicians
or other individuals authorized to order tests are being encouraged to
order medically unnecessary tests. More importantly, if the laboratory
discovers that it has in some way contributed to the ordering of
unnecessary tests, the OIG believes the laboratory has a duty to modify
its practices, as well as notify the physician(s) or other authorized
individual(s) of its concerns and recommend corrective action.
There are many methods by which a laboratory may determine
excessive utilization of laboratory services. One approach to self-
monitoring is to hire an outside consultant to analyze the laboratory's
patterns of utilization, and investigate any potential problems or
aberrancies.
Another approach is to analyze test utilization data by CPT or
HCPCS code, for the top 30 tests performed each year. Laboratories
could do this by keeping track of the number of tests performed by CPT
or HCPCS code or of the number of claims submitted for each test. The
laboratories would then compute the percentage growth in the number of
tests or claims submitted for each of the top 30 tests from one year to
the next. We believe that if a test's utilization grows more than 10
percent, the laboratory should undertake a reasonable inquiry to
ascertain the cause of such growth. If the laboratory determines that
the increase in test utilization occurred for a benign reason, such as
the acquisition of a new laboratory facility, then the laboratory need
not take any action. However, if the laboratory determines that the
increase in utilization was caused by a misunderstanding or ignorance
by the ordering physicians or other authorized individuals regarding
the billing consequences of the tests they ordered or an action on the
part of the facility, the laboratory should take any steps that it
deems reasonably necessary to address the issue and to ensure
misconduct is not occurring.
3. Billing
Laboratory compliance policies should ensure that all claims for
testing services submitted to Medicare or other Federal health care
programs correctly identify the services ordered by the physician or
other authorized individual and performed by the laboratory.
a. Selection of CPT or HCPCS Codes: Laboratory compliance policies
should ensure that the CPT or HCPCS code that is used to bill,
accurately describes the service that was ordered and performed.
Laboratories cannot alter the physician's order in any way either
increasing or decreasing the number of services performed without the
express consent of the ordering physician or other authorized
individual. To ensure code accuracy, laboratories should require that
individuals with technical expertise in laboratory testing review the
appropriateness of the codes before the claims are submitted.
Intentional or knowing upcoding (i.e., the selection of a code to
maximize reimbursement when such code is not the most appropriate
descriptor of the service) could violate the False Claims Act and/or
other civil laws, and criminal law.
b. Selection of ICD-9-CM codes: Medicare carriers and fiscal
intermediaries have the authority to develop and implement Local
Medical Review Policy (LMRP) which specify when, and under what
circumstances, a service will be considered covered, reasonable and
necessary and what documentation will support the need for the service.
In some cases, LMRPs may limit coverage for specified laboratory tests
to specific medical diagnoses. Laboratory compliance policies should
ensure that the lab can support tests billed to Medicare with
documentation obtained from the physician ordering the test, an
authorized person on the physician's staff or other individual
authorized by law to order tests. Laboratories should not: (1) Use
information provided by the physician or other authorized individual
from earlier dates of service (other than standing orders, as discussed
below at paragraph 4); (2) create diagnosis information that has
triggered reimbursement in the past; (3) use computer programs that
automatically insert diagnosis codes without receipt of diagnostic
information from the ordering physician or other authorized individual;
or (4) make up information for claim submission purposes. Laboratories
should: (1) Contact the ordering physician, authorized person on the
physician's staff or other individual authorized to order tests to
obtain information in the event that such information was not provided;
and (2) accurately translate narrative diagnoses obtained from the
physician or other authorized individual to ICD-9-CM codes. Where
medical documentation is obtained from a physician or other authorized
individual after receipt of the specimen and the requisition form, it
should be maintained.
c. Tests covered by claims for reimbursement: Only those tests that
are ordered by an authorized individual or physician, are performed and
meet Medicare's conditions of coverage are
[[Page 45081]]
reimbursable by Medicare. If a laboratory receives a specimen without a
valid test order or with a test order which is ambiguous, the
laboratory must verify the tests which the physician wants and perform
them before submitting a claim for reimbursement to Medicare. In this
way, if the physician or other authorized individual did not order the
test, the laboratory will not erroneously bill for it.
Similarly, if a laboratory did not perform an ordered test due to,
for example, a laboratory accident or insufficient quantities of
specimen, the laboratory should not submit a claim to Medicare.
Medicare payment is made for tests that are ordered, performed, and
covered. The submission of a claim for tests that were either not
ordered or were not performed could subject a provider to sanctions
under administrative, civil or criminal law.
d. Billing of calculations: Consistent with Medicare coverage
rules, laboratory compliance policies should ensure that the laboratory
does not bill both for calculations (e.g., calculated LDLs, T7s, and
indices) and the tests that are performed to derive such calculations.
In many situations, physicians are not offered a choice about whether
to receive such calculations, nor are they aware of the practice of
some laboratories to bill Medicare for such calculations in addition to
the underlying tests. The fact that a separate CPT code exists does not
mean that Medicare separately reimburses for the service assigned to
the code. Billing both for the calculations and the underlying tests
constitutes double billing, which may subject a laboratory to sanctions
and other remedies available under civil, criminal, and administrative
law.
e. Reflex testing: Reflex testing occurs when initial test results
are positive or outside normal parameters and indicate that a second
related test is medically appropriate. In order to avoid performing
unnecessary reflex tests, labs may want to design their requisition
form in such a way which would only allow for the reflex test when
necessary. Therefore, the condition under which the reflex test will be
performed should be clearly indicated on the requisition form.
Laboratories may wish to adopt a similar policy for confirmation
testing which may be mandatory.
4. Reliance on Standing Orders
Although standing orders are not prohibited in connection with an
extended course of treatment, too often they have led to abusive
practices. Standing orders in and of themselves are not usually
acceptable documentation that tests are reasonable and necessary.
Accordingly, the insurer may reject standing orders as evidence that a
test is reasonable and necessary. Medicare contractors can and may
require additional documentation to support the medical necessity of
the test. As a result of the potential problems standing orders may
cause, the use of standing orders is discouraged.
Thus, while laboratory compliance programs may permit the use of
standing orders executed in connection with an extended course of
treatment, the compliance program should require the laboratory to
periodically monitor standing orders. Standing orders should have a
fixed term of validity and must be renewed at their expiration. We
suggest that, consistent with State law requirements, a laboratory
should contact all nursing homes from which the laboratory has received
such standing orders and request that they confirm in writing the
validity of all current standing orders. In addition, in accordance
with State law, laboratories should verify standing orders relied upon
at draw stations with the physician, authorized person on the
physician's staff, or other authorized individual who has provided the
standing orders to the laboratory. With respect to patients with End
Stage Renal Disease (ESRD), at least once annually laboratories should
contact each ESRD facility or unit to request confirmation in writing
of the continued validity of all existing standing orders.
5. Compliance With Applicable HHS Fraud Alerts
The OIG and HCFA periodically issue fraud alerts <SUP>10</SUP>
setting forth activities believed to raise legal and enforcement
issues. Laboratory compliance programs should require that any and all
fraud alerts issued by OIG and HCFA are carefully considered by the
legal staff, chief compliance officer, or other appropriate personnel.
Moreover, the compliance programs should require that a laboratory
cease and correct any conduct criticized in such a fraud alert, if
applicable to laboratories, and take reasonable action to prevent such
conduct from reoccurring in the future. If appropriate, a laboratory
should take the steps described in Section G regarding investigations,
reporting and correction of identified problems.
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\10\ Both OIG and HCFA fraud alerts can be located on the
internet. The OIG web site address is: http://www.dhhs.gov/progorg/
oig. The HCFA web site address is: http://www.hcfa.gov.
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6. Marketing
Laboratory compliance programs should require honest,
straightforward, fully informative and non-deceptive marketing. It is
in the best interests of patients, physicians, laboratories, the
Government and private health plans that physicians and other
individuals authorized to order tests fully understand the services
offered by the laboratory, the services that will be provided when
tests are ordered, and the financial consequences for Medicare, as well
as other payors, when tests are billed. Accordingly, laboratories that
market their services should ensure that their marketing information is
clear, correct, non-deceptive and fully informative.
7. Prices Charged to Physicians
Laboratories are paid for their services by a variety of payors in
addition to Medicare and other Federal health care programs. Such
payors often include private health insurers, other health care
providers, and physicians. We believe it is essential that the
physician take into account the patient's best interest when deciding
where to refer the patient's specimen.
The prices that laboratories charge physicians for certain
laboratory services raise issues that should be addressed in a
laboratory's written compliance policies. These policies should ensure
that laboratories are not providing any inducements to gain a
physician's business,<SUP>11</SUP> including charging physicians a
price below fair market value for their non-Federal health care program
tests. Laboratories that charge physicians a price below fair market
value to induce them to refer their Federal health care program
business may be risking anti-kickback enforcement and false claims
actions.
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\11\ The OIG has published ``Special Fraud Alert: Arrangements
for the Provision of Clinical Lab Services'' that addresses how the
anti-kickback statute relates to arrangements for the provision of
clinical lab services. See 59 FR 65377 (December 19, 1994); OIG's
web site at http://www.dhhs.gov/progorg/oig.
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8. Retention of Records
Compliance programs should ensure that all records required either
by Federal or State law or by the compliance program are created and
maintained. Adequate documentation of compliance efforts are essential
in the event that a laboratory comes under Government scrutiny.
9. Compliance as an Element of a Performance Plan
Clinical laboratories should make the promotion of and adherence to
[[Page 45082]]
compliance an element in evaluating the performance of managers,
supervisors and all other employees. They, along with other employees,
should be periodically trained in new compliance policies and
procedures. In addition, all managers and supervisors involved in the
sale, marketing, or billing of laboratory services, and those who
oversee phlebotomists should (1) discuss with all supervised employees
the compliance policies and legal requirements applicable to their
function; (2) inform all supervised personnel that strict compliance
with these policies and requirements is a condition of employment; and
(3) disclose to all supervised personnel that the laboratory will take
disciplinary action up to and including termination for violation of
these policies or requirements. In addition to making performance of
these duties an element in evaluations, the compliance officer or
laboratory management may also choose to include in the laboratory's
compliance program a policy that managers and supervisors may be
sanctioned for failure to adequately instruct their subordinates or for
failing to detect non-compliance with applicable policies and legal
requirements, where reasonable diligence on the part of the manager or
supervisor would have led to the discovery of any problems or
violations and given the laboratory the opportunity to correct them
earlier.
B. Designation of a Compliance Officer and a Compliance Committee
1. Compliance Officer
Every clinical laboratory should designate a compliance officer to
serve as the focal point for compliance activities. This responsibility
may be the individual's sole duty or added to other management
responsibilities, depending upon the size and resources of the clinical
laboratory and the complexity of the task. Designating a compliance
officer with the appropriate authority is critical to the success of
the program, necessitating the appointment of a high-level official in
the organization with direct access to the governing body and the
CEO.<SUP>12</SUP> The officer should have sufficient funding and staff
to perform his or her responsibilities fully. Coordination and
communication are the key functions of the compliance officer with
regard to planning, implementing, and monitoring the compliance
program.
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\12\ The OIG believes that it is not advisable for the
compliance function to be subordinate to the clinical laboratory's
general counsel, or comptroller or similar officer. Free standing
compliance functions help to ensure independent and objective legal
reviews and financial analyses of the institution's compliance
efforts and activities. By separating the compliance function from
the key management positions of general counsel or chief financial
officer (where the size and structure of the clinical laboratory
make this a feasible option), a system of checks and balances is
established to more effectively achieve the goals of the compliance
program.
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The compliance officer's primary responsibilities should include:
<bullet> Overseeing and monitoring the implementation of the
compliance program; <SUP>13</SUP>
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\13\ For clinical laboratory chains, the OIG encourages
coordination with each affiliate owned by the company through the
use of a headquarter's compliance officer, communicating with the
designated compliance officers in each facility, or regional office,
as appropriate.
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<bullet> Reporting on a regular basis to the clinical laboratory's
governing body, CEO and compliance committee on the progress of
implementation, and assisting these components in establishing methods
to improve the clinical laboratory's efficiency and quality of
services, and to reduce the clinical laboratory's vulnerability to
fraud, abuse and waste;
<bullet> Developing and distributing to all affected employees all
written compliance policies and procedures. These policies and
procedures should be readily understandable by all employees (e.g.,
translated into other languages, interpreted in sign language, and/or
put into Braille as necessary);
<bullet> Periodically revising the program in light of changes in
the needs of the organization, and in the law, policies and procedures
of Government and private payor health plans;
<bullet> Developing, coordinating, and participating in a
multifaceted educational and training program that focuses on the
elements of the compliance program, and seeks to ensure that all
appropriate employees and management are knowledgeable of, and comply
with, pertinent Federal, State and private payor standards;
<bullet> Ensuring that physicians who order services from the
clinical laboratory are informed of the clinical laboratory's
compliance program standards with respect to coding, billing, and
marketing, among other things;
<bullet> Assisting the clinical laboratory's financial management
in coordinating internal compliance review and monitoring activities,
including annual or periodic reviews of policies;
<bullet> Independently investigating and acting on matters related
to compliance, including the flexibility to design and coordinate
internal investigations (e.g., responding to reports of problems or
suspected violations) and any resulting corrective action; and
<bullet> Developing policies and programs that encourage managers
and employees to report suspected fraud and other improprieties without
fear of retaliation.
The compliance officer must have the authority to review all
documents and other information that are relevant to compliance
activities, including, but not limited to, requisition forms, billing
information, claim information, and records concerning the marketing
efforts of the clinical laboratory and its arrangements with its
clients. This policy enables the compliance officer to review contracts
and obligations (seeking the advice of legal counsel, where
appropriate) that may contain referral and payment issues that could
violate the anti-kickback statute, as well as the physician self-
referral prohibition and other legal or regulatory requirements.
2. Compliance Committee
The OIG recommends that a compliance committee be established to
advise the compliance officer and assist in the implementation of the
compliance program.<SUP>14</SUP> The committee's functions should
include:
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\14\ The OIG recommends the compliance committee consist of
individuals with varying perspectives and responsibilities in the
organization.
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<bullet> Analyzing the organization's regulatory environment, the
legal requirements with which it must comply, and specific risk areas;
<bullet> Assessing existing policies and procedures that address
these areas for possible incorporation into the compliance program;
<bullet> Working within the clinical laboratory to develop
standards of conduct and policies and procedures to promote compliance;
<bullet> Recommending and monitoring the development of internal
systems and controls to implement the clinical laboratory's standards,
policies and procedures as part of its daily operations;
<bullet> Determining the appropriate strategy/approach to promote
compliance with the program and detection of any potential violations,
such as through hotlines and other fraud reporting mechanisms; and
<bullet> Developing a system to solicit, evaluate and respond to
complaints and problems.
The committee may also assume other functions as the compliance
concept becomes part of the overall clinical laboratory operating
structure and daily routine.
[[Page 45083]]
C. Conducting Effective Training and Education
The proper education, training and retraining of corporate
officers, managers, and all other employees are significant elements of
an effective compliance program. As part of its compliance program, a
clinical laboratory should require all affected employees to attend
specific training when they are first hired and on a periodic basis
thereafter, including appropriate training in Federal and State
statutes, regulations, program requirements, the policies of private
payors, and corporate ethics. The training should emphasize the
organization's commitment to compliance with these legal requirements
and policies.
These training programs should include sessions highlighting the
organization's compliance program, summarizing fraud and abuse laws,
and discussing coding requirements, claim development and claim
submission process and marketing practices that reflect current legal
and program standards. The clinical laboratory must take steps to
communicate effectively its standards and procedures to all affected
employees ( e.g., by requiring participation in training programs and
disseminating publications that explain in a practical manner specific
requirements).<SUP>15</SUP> Managers of specific departments can assist
in identifying areas that require training and in carrying out such
training. Training instructors may come from outside or inside the
organization. New employees should be targeted for training early in
their employment.<SUP>16</SUP> The compliance officer should document
the attendees, the subjects covered, and the material distributed at
the training sessions sponsored by the clinical laboratory as part of
the compliance program.
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\15\ Some publications, such as the OIG's Special Fraud Alerts,
audit and inspection reports, and advisory opinions are readily
available from the OIG and could be the basis for standards and
educational courses for appropriate clinical laboratory employees.
These documents can be found on the OIG's web site at http://
www.dhhs.gov/progorg/oig.
\16\ Certain positions, such as those involving the coding of
medical services, create a greater organizational legal exposure,
and therefore require specialized training. One recommendation would
be for a clinical laboratory to attempt to fill such positions with
individuals who have the appropriate educational background and
training.
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A variety of teaching methods, such as interactive training, and
training in several different languages, particularly where a clinical
laboratory has a culturally diverse staff, should be implemented so
that all affected employees are knowledgeable of the clinical
laboratory's standards of conduct and procedures for alerting senior
management to problems and concerns. Targeted training should be
provided to corporate officers, managers and other employees whose
actions affect the accuracy of the claims submitted to Government and
private payors, such as employees involved in the coding, billing, and
marketing processes. For example, for certain employees involved in the
billing and coding functions, periodic training in proper CPT/HCPCs and
ICD-9 coding and documentation should be required. In addition to
specific training in the areas identified in section II.A, above, basic
training for appropriate corporate officers, managers and other
employees should include such topics as:
<bullet> Government and private payor reimbursement principles;
<bullet> General prohibitions on paying or receiving remuneration
to induce referrals;
<bullet> Proper translation of narrative diagnoses;
<bullet> Only billing for services ordered, performed and reported;
<bullet> Physician approved amendments to requisition forms;
<bullet> Proper documentation or confirmation of services rendered;
and
<bullet> Duty to report misconduct.
Clarifying and emphasizing these areas of concern through training
and educational programs are particularly relevant to a clinical
laboratory's marketing representatives, in that the pressure to meet
business goals may render these employees vulnerable to engaging in
prohibited practices.
The OIG suggests that all affected employees be made part of the
clinical laboratory's various educational and training programs.
Employees should be required to have a minimum number of educational
hours per year, as appropriate, as part of their employment
responsibilities.<SUP>17</SUP> In departments with high employee
turnover, periodic training updates are critical.
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\17\ In its corporate integrity agreements, the OIG usually
requires a minimum number of hours annually for basic training in
compliance areas. More hours are required for specialty fields such
as billing and coding.
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The OIG recommends that attendance and participation in training
programs be made a condition of continued employment and that failure
to comply with training requirements should result in disciplinary
action, including possible termination, when such failure is serious.
Adherence to the provisions of the compliance program, such as training
requirements, should be a factor in the annual evaluation of each
employee. The clinical laboratory should retain adequate records of its
training of employees, including attendance logs and material
distributed at training sessions.
D. Developing Effective Lines of Communications
1. Access to the Compliance Officer
An open line of communication between the compliance officer and
clinical laboratory employees is equally important to the successful
implementation of a compliance program and the reduction of any
potential for fraud, abuse and waste. Written confidentiality and non-
retaliation policies should be developed and distributed to all
employees to encourage communication and the reporting of incidents of
potential misconduct.<SUP>18</SUP> The compliance committee should also
develop several independent reporting paths for an employee to report
fraud, waste or abuse so that such reports cannot be diverted by
supervisors or other personnel.
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\18\ The OIG believes that whistleblowers should be protected
against retaliation, a concept embodied in the provisions of the
False Claims Act. In many cases, employees sue their employers under
the False Claims Act's qui tam provisions out of frustration because
of the company's failure to take action when a questionable,
fraudulent or abusive situation was brought to the attention of
senior corporate officials.
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The OIG encourages the establishment of a procedure so that
clinical laboratory employees may seek clarification from the
compliance officer or members of the compliance committee in the event
of any confusion or question with regard to a laboratory policy or
procedure. Questions and responses should be documented and dated and,
if appropriate, shared with other staff so that standards, policies and
procedures can be updated and improved to reflect any necessary changes
or clarifications. The compliance officer may want to solicit employee
input in developing these communication and reporting systems.
2. Hotlines and Other Forms of Communication
The OIG encourages the use of hotlines (including anonymous
hotlines), e-mails, written memoranda, newsletters, and other forms of
information exchange to maintain these open lines of communication. If
the clinical laboratory establishes a hotline, the telephone number
should be made readily available to all employees possibly by
conspicuously posting the telephone number in common work
areas.<SUP>19</SUP> Employees should be permitted
[[Page 45084]]
to report matters on an anonymous basis. Matters reported through the
hotline or other communication sources that suggest substantial
violations of compliance policies, regulations, statutes or program
requirements of Federal, State and private insurers should be
documented and investigated promptly to determine their veracity. A log
should be maintained by the compliance officer that records such calls,
including the nature of any investigation and its results. Such
information should be included in reports to the governing body, the
CEO and compliance committee. Further, while the clinical laboratory
should always strive to maintain the confidentiality of an employee's
identity, it should also explicitly communicate that there may be a
point where the individual's identity may become known or may have to
be revealed in certain instances when governmental authorities become
involved.
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\19\ Clinical laboratories should also post in a prominent,
available area the HHS-OIG Hotline telephone number, 1-800-HHS-TIPS
(447-8477), in addition to any company hotline number that may be
posted.
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The OIG recognizes that assertions of fraud and abuse by employees
who may have participated in illegal conduct or committed other
malfeasance raise numerous complex legal and management issues that
should be examined on a case-by-case basis. The compliance officer
should work closely with legal counsel, who can provide guidance
regarding such issues.
E. Enforcing Standards Through Well-Publicized Disciplinary Guidelines
1. Discipline Policy and Actions
An effective compliance program should include guidance regarding
disciplinary action for corporate officers, managers, and other
employees who have failed to comply with the clinical laboratory's
standards of conduct, policies and procedures, or Federal and State
laws, or those who have otherwise engaged in wrongdoing, which have the
potential to impair the clinical laboratory's status as a reliable,
honest and trustworthy health care provider.
The OIG believes that the compliance program should include a
written policy statement setting forth the degrees of disciplinary
actions that may be imposed upon corporate officers, managers, and
other employees for failing to comply with the clinical laboratory's
standards and policies and applicable statutes and regulations.
Intentional or reckless noncompliance should subject transgressors to
significant sanctions. Such sanctions could range from oral warnings to
suspension or termination. The written standards of conduct should
elaborate on the procedures for handling disciplinary problems and
those who will be responsible for taking appropriate action. Some
disciplinary actions can be handled by department managers, while
others may have to be resolved by a senior manager. Disciplinary action
may be appropriate where a responsible employee's failure to detect a
violation is attributable to his or her negligence or reckless conduct.
Employees should be advised by the clinical laboratory that
disciplinary action will be taken on a fair and equitable basis.
Managers and supervisors should be made aware that they have a
responsibility to discipline employees in an appropriate and consistent
manner.
It is vital to publish and disseminate the range of disciplinary
standards for improper conduct and to educate corporate officers,
managers and other employees regarding these standards. The
consequences of noncompliance should be consistently applied and
enforced, in order for the disciplinary policy to have the required
deterrent effect. All levels of employees should be subject to the same
disciplinary action for the commission of similar offenses. The
commitment to compliance applies to all personnel levels within a
clinical laboratory. The OIG believes that corporate officers,
managers, and other employees should be held accountable for failing to
comply with, or for the foreseeable failure of their subordinates to
adhere to, the applicable standards, laws, and procedures.
2. New Employee Policy
For all new employees who have discretionary authority to make
decisions that may involve compliance with the law or compliance
oversight, clinical laboratories should conduct a reasonable and
prudent background investigation, including a reference check, as part
of every such employment application.<SUP>20</SUP> The application
should specifically require the applicant to disclose any criminal
conviction, as defined by 42 U.S.C. 1320a-7(i), or exclusion action.
Pursuant to the compliance program, clinical laboratory policies should
prohibit the employment of individuals who have been recently convicted
of a criminal offense related to health care or who are listed as
debarred, excluded or otherwise ineligible for participation in Federal
health care programs (as defined in 42 U.S.C. 1320a-
7b(f)).<SUP>21</SUP> In addition, pending the resolution of any
criminal charges or proposed debarment or exclusion, the OIG recommends
that such individuals should be removed from direct responsibility for
or involvement in any Federal health care program.<SUP>22</SUP> With
regard to current employees, physicians or other individuals authorized
to order tests, if resolution of the matter results in conviction,
debarment or exclusion, the clinical laboratory should terminate its
employment or other contract arrangement with the individual or
physician.
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\20\ The Cumulative Sanction Report is an OIG-produced report
available on the Internet at http://www.dhhs.gov/progorg/oig. It is
updated on a regular basis to reflect the status of health care
providers who have been excluded from participation in the Medicare
and Medicaid programs. In addition, the General Services
Administration maintains a monthly listing of debarred contractors
on the Internet at http://www.arnet.gov/epls. Also, once the data
base established by the Health Care Fraud and Abuse Data Collection
Act of 1996 is fully operational, the hospital should regularly
request information from this data bank as part of its employee
screening process.
\21\ Likewise, clinical laboratory compliance programs should
establish standards prohibiting the execution of contracts with
physicians or other individual authorized to order tests that have
been recently convicted of a criminal offense related to health care
or that are listed by a Federal agency as debarred, excluded, or
otherwise ineligible for participation in Federal health care
programs.
\22\ Prospective employees who have been officially reinstated
into the Medicare and Medicaid programs by the OIG may be considered
for employment upon proof of such reinstatement.
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F. Auditing and Monitoring
An ongoing evaluation process involving thorough monitoring and
regular reporting to the clinical laboratory's corporate officers is
critical to a successful compliance program. Compliance reports created
by this ongoing monitoring, including reports of suspected
noncompliance, should be maintained by the compliance officer and
shared with the clinical laboratory's corporate officers and the
compliance committee.
Although many monitoring techniques are available, one effective
tool to promote and ensure compliance is the performance of regular
compliance audits by internal or external auditors who have expertise
in Federal and State health care statutes, regulations and the program
requirements of Federal, State and private insurers. At a minimum,
these audits should be designed to address the clinical laboratory's
compliance with laws governing kickback arrangements, the physician
self-referral prohibition, CPT/HCPCS coding and billing, ICD-9 coding,
claim development and submission, reimbursement, marketing, reporting
and record keeping. In
[[Page 45085]]
addition, the audits and reviews should inquire into the clinical
laboratory's compliance with specific rules and policies that have been
the focus of particular attention on the part of the Medicare fiscal
intermediaries or carriers, and law enforcement, as evidenced by OIG
Special Fraud Alerts, OIG audits and evaluations, and publically
announced law enforcement initiatives and also should focus on any
areas of concern that have been identified by any entity, (i.e.,
Federal, State, or internally) specific to the individual clinical
laboratory.
Monitoring techniques may include sampling protocols that permit
the compliance officer to identify and review variations from an
established baseline.<SUP>23</SUP> Significant variations from the
baseline should trigger a reasonable inquiry to determine the cause of
the deviation. If the inquiry determines that the deviation occurred
for legitimate, explainable reasons, the compliance officer, corporate
officer or manager may want to limit any corrective action or take no
action. If it is determined that the deviation was caused by improper
procedures, misunderstanding of rules, including fraud and systemic
problems, the clinical laboratory should take prompt steps to correct
the problem. If potential fraud or violations of the False Claims Act
are involved, the laboratory should report the potential violation to
the OIG or the Department of Justice (see discussion in Section G.2,
below). Any repayment of an overpayment which results from such a
violation should be made as part of the discussion with law
enforcement.
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\23\ The OIG recommends that when a compliance program is
established in a clinical laboratory, the compliance officer, with
the assistance of corporate officers, should take a ``snapshot'' of
their operations from a compliance perspective. This assessment can
be undertaken by outside consultants, law or accounting firms, or
internal staff, with authoritative knowledge of health care
compliance requirements. This ``snapshot,'' often used as part of
benchmarking analyses, becomes a baseline for the compliance officer
and other corporate officers to judge the clinical laboratory's
progress in reducing or eliminating potential areas of
vulnerability. For example, it has been suggested that a baseline
level include the frequency and percentile levels of each CPT code
in relation to the clinical laboratory's overall billing.
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When making any overpayment, the clinical laboratory should inform
the payor of the following information (1) the refund is being made
pursuant to a voluntary compliance program; (2) a description of the
complete circumstances surrounding the overpayment; (3) the methodology
by which the overpayment was determined; (4) any claim-specific
information used to determine the overpayment and; (5) the amount of
the overpayment.
The OIG believes that the compliance officer needs to be made aware
of these overpayment patterns, violations or deviations and look for
trends that may demonstrate a systemic problem.
An effective compliance program should also incorporate periodic
(at least annual) reviews of whether the program's compliance elements
have been satisfied, e.g., whether there has been appropriate; (1)
dissemination of the program's standards; (2) training; (3) ongoing
educational programs; and (4) disciplinary actions, among others. This
process will verify actual conformance with the compliance program. The
review also should look into whether appropriate records have been
created and maintained to document the implementation of an effective
program. However, when monitoring discloses that deviations were not
detected in a timely manner due to program deficiencies, appropriate
modifications must be implemented. Such evaluations, when developed
with the support of management, can help ensure compliance with the
clinical laboratory's policies and procedures.
As part of the review process, the compliance officer or reviewers
should consider techniques such as:
<bullet> On-site visits;
<bullet> Interviews with personnel involved in management,
marketing/sales, operations, coding/billing, claim development and
submission, and other related activities;
<bullet> Questionnaires developed to solicit impressions of a broad
cross-section of the clinical laboratory's employees and referring
clients;
<bullet> Review of requisition forms and other documents that
support claims for reimbursement;
<bullet> Review of written materials and documentation produced by
the laboratory and used by physicians and other individuals authorized
to order tests; and
<bullet> Trend analyses, or longitudinal studies, that seek
deviations in billing or ordering patterns over a given period.
The reviewers should:
<bullet> Be independent of line management;
<bullet> Have access to existing audit resources, relevant
personnel and all relevant areas of operation;
<bullet> Present written evaluative reports on compliance
activities to the CEO, governing body and members of the compliance
committee on a regular basis, but no less than annually; and
<bullet> Specifically identify areas where corrective actions are
needed.
With these reports, the clinical laboratory management can take
whatever steps are necessary to correct past problems and prevent them
from recurring. In certain cases, subsequent reviews or studies would
be advisable to ensure that the recommended corrective actions have
been implemented successfully.
The clinical laboratory should document its efforts to comply with
applicable statutes, regulations and the program requirements of
Federal, State and private payors. For example, where a clinical
laboratory, in its efforts to comply with a particular statute,
regulation or program requirement, requests advice from a Government
agency (including a Medicare fiscal intermediary or carrier) charged
with administering a Federal health care program, the clinical
laboratory should document and retain a record of the request and any
written or oral response. This step is particularly important if the
clinical laboratory intends to rely on that response. The laboratory
should memorialize its determination as to whether reliance on any such
advice is reasonable, and its efforts to develop procedures based upon
such advice.
G. Responding to Detected Offenses and Developing Corrective Action
Initiatives
1. Violations and Investigations
Violations of a clinical laboratory's compliance program, failures
to comply with applicable Federal or State law, and other requirements
of Government and private health plans, and other types of misconduct
threaten a clinical laboratory's status as a reliable, honest and
trustworthy provider capable of participating in Federal health care
programs. Detected but uncorrected misconduct can seriously endanger
the mission, reputation, and legal status of the clinical laboratory.
Consequently, upon reports or reasonable indications of suspected
noncompliance, it is important that the chief compliance officer or
other management officials initiate prompt steps to investigate the
conduct in question to determine whether a material violation of
applicable law or the requirements of the compliance program has
occurred, and if so, take steps to correct the problem.<SUP>24</SUP> As
appropriate, such steps
[[Page 45086]]
may include an immediate referral to criminal and/or civil law
enforcement authorities, a corrective action plan,<SUP>25</SUP> a
report to the Government,<SUP>26</SUP> and the submission of any
overpayments, if applicable.
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\24\ Instances of non-compliance must be determined on a case-
by-case basis. The existence, or amount, of a monetary loss to a
health care program is not solely determinative of whether or not
the conduct should be investigated and reported to governmental
authorities. In fact, there may be instances where there is no
monetary loss at all, but corrective action and reporting are still
necessary to protect the integrity of the applicable program and its
beneficiaries.
\25\ Advice from the clinical laboratory's in-house counsel or
an outside law firm may be sought to determine the extent of the
clinical laboratory's liability and to plan the appropriate course
of action.
\26\ The OIG currently maintains a voluntary disclosure program
that encourages providers to report suspected fraud. The concept of
voluntary self-disclosure is premised on a recognition that the
Government alone cannot protect the integrity of the Medicare and
other Federal health care programs. Health care providers must be
willing to police themselves, correct underlying problems and work
with the Government to resolve these matters. The OIG's voluntary
self-disclosure program has four prerequisites (1) the disclosure
must be on behalf of an entity and not an individual; (2) the
disclosure must be truly voluntary (i.e., no pending proceeding or
investigation); (3) the entity must disclose the nature of the
wrongdoing and the harm to the Federal programs; and (4) the entity
must not be the subject of a bankruptcy proceeding before or after
the self-disclosure.
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Depending upon the nature of the alleged violations, an internal
investigation will probably include interviews and a review of relevant
documents. Some clinical laboratories should consider engaging outside
counsel, auditors, or health care experts to assist in an
investigation. Records of the investigation should contain
documentation of the alleged violation, a description of the
investigative process, copies of interview notes and key documents, a
log of the witnesses interviewed and the documents reviewed, the
results of the investigation, e.g., any disciplinary action taken, and
the corrective action implemented. While any action taken as the result
of an investigation will necessarily vary depending upon the clinical
laboratory and the situation, clinical laboratories should strive for
some consistency by utilizing sound practices and disciplinary
protocols. Further, after a reasonable period, the compliance officer
should review the circumstances that formed the basis for the
investigation to determine whether similar problems have since been
uncovered.
If an investigation of an alleged violation is undertaken and the
compliance officer believes the integrity of the investigation may be
at stake because of the presence of employees under investigation,
those subjects should be removed from their current work activity until
the investigation is completed (unless otherwise requested by law
enforcement). In addition, the compliance officer should take
appropriate steps to secure or prevent the destruction of documents or
other evidence relevant to the investigation. If the clinical
laboratory determines that disciplinary action is warranted, it should
be prompt and imposed in accordance with the clinical laboratory's
written standards of disciplinary action.
2. Reporting
If the compliance officer, compliance committee or management
official discovers credible evidence of misconduct from any source and,
after a reasonable inquiry, has reason to believe that the misconduct
may violate criminal, civil or administrative law, then the clinical
laboratory promptly should report the matter to the appropriate
governmental authority <SUP>27</SUP> within a reasonable period, but
not more than 60 days <SUP>28</SUP> after determining that there is
credible evidence of a violation.<SUP>29</SUP> Prompt reporting will
demonstrate the clinical laboratory's good faith and willingness to
work with governmental authorities to correct and remedy the problem.
In addition, reporting such conduct will be considered a mitigating
factor by the OIG in determining administrative sanctions (e.g.,
penalties, assessments, and exclusion), if the reporting provider
becomes the target of an OIG investigation.<SUP>30</SUP>
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\27\ I.e., Federal and/or State law enforcement having
jurisdiction over such matter. Such governmental authority would
include DOJ and OIG with respect to Medicare and Medicaid violations
giving rise to causes of actions under various criminal, civil and
administrative false claims statutes.
\28\ To qualify for the ``not less than double damages''
provision of the False Claims Act, the report must be provided to
the Government within thirty days after the date when the laboratory
first obtained the information. 31 U.S.C. 3729(a).
\29\ The OIG believes that some violations may be so serious
that they warrant immediate notification to governmental
authorities, prior to, or simultaneous with, commencing an internal
investigation, e.g., if the conduct (1) is a clear violation of
criminal law; (2) has a significant adverse effect on the quality of
care provided to program beneficiaries (in addition to any other
legal obligations regarding quality of care); or (3) indicates
evidence of a systemic failure to comply with applicable laws, an
existing corporate integrity agreement, or other standards of
conduct, regardless of the financial impact on Federal health care
programs.
\30\ The OIG has published criteria setting forth those factors
that the OIG takes into consideration in determining whether it is
appropriate to exclude a health care provider from program
participation pursuant to 42 U.S.C. 1320a-7(b)(7) for violations of
various fraud and abuse laws. See 62 FR 67392 (12/24/97).
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When reporting misconduct to the Government, a clinical laboratory
should provide all evidence relevant to the potential violation of
applicable Federal or State law(s) and potential cost impact. The
compliance officer, under advice of counsel, and with guidance from the
governmental authorities, could be requested to continue to investigate
the reported violation. Once the investigation is completed, the
compliance officer should be required to notify the appropriate
governmental authority of the outcome of the investigation, including a
description of the impact of the alleged violation on the operation of
the applicable health care programs or their beneficiaries. If the
investigation ultimately indicates that criminal or civil violations
may have occurred, the appropriate Federal and State officials
<SUP>31</SUP> should be notified immediately.
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\31\ Appropriate Federal and State authorities include the
Criminal and Civil Divisions of the Department of Justice, the U.S.
Attorney in the clinical laboratory's district, and the
investigative arms for the agencies administering the affected
Federal or State health care programs, such as the State Medicaid
Fraud Control Unit, the Defense Criminal Investigative Service, and
the Offices of Inspector General of the Department of Health and
Human Services, the Department of Veterans Affairs and the Office of
Personnel Management (which administers the Federal Employee Health
Benefits Program).
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As previously stated, the clinical laboratory should take
appropriate corrective action, including the imposition of proper
disciplinary action, and prompt identification and restitution of any
overpayment to the affected payor. In cases where potential fraud or
violations of the False Claims Act are involved payment should be made
as part of discussions with law enforcement. Failure to repay
overpayments within a reasonable period of time could be interpreted as
an intentional attempt to conceal the overpayment from the Government,
thereby establishing an independent basis for a criminal violation with
respect to the clinical laboratory, as well as any individuals who may
have been involved.<SUP>32</SUP> For this reason, clinical laboratory
compliance programs should emphasize that overpayments obtained from
Medicare or other Federal health care programs should be promptly
returned to the payor that made the erroneous payment. Section F
details the information which should be provided to the contractor when
making a repayment.
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\32\ See 42 U.S.C. 1320a-7b(a)(3).
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Conclusion
Through this document, the OIG has attempted to provide a
foundation for development of an effective and cost-efficient clinical
laboratory compliance program. As previously stated, however, each
program must be tailored to fit the needs and resources of an
individual clinical laboratory, depending upon its
[[Page 45087]]
particular corporate structure, mission, size and employee composition.
The statutes, regulations and guidelines of the Federal and State
health insurance programs, as well as the policies and procedures of
the private health plans, should be integrated into every clinical
laboratory's compliance program.
The OIG recognizes that the health care industry in this country,
which reaches millions of beneficiaries and expends about a trillion
dollars annually, is constantly evolving. As stated throughout this
guidance, compliance is a dynamic process that helps to ensure that
clinical laboratories and other health care providers are better able
to fulfill their commitment to ethical behavior, as well as meet the
changes and challenges being imposed upon them by Congress and private
insurers. Ultimately, it is OIG's hope that a voluntarily created
compliance program will enable clinical laboratories to meet their
goals, improve the quality of services and control of claims
submission, and substantially reduce fraud, waste and abuse, as well as
the cost of health care to Federal, State and private health insurers.
Dated: August 14, 1998.
June Gibbs Brown,
Inspector General.
[FR Doc. 98-22559 Filed 8-21-98; 8:45 am]
BILLING CODE 4150-04-P